POLITICS
05/04/2012 04:28 BST | Updated 05/04/2012 08:25 BST

UK Economy Will Suffer If Francois Hollande Becomes President Of France, Warns Senior Economist

The UK would fall back into recession if Francois Hollande became French president in a few weeks time, according to a leading French economist working in London.

Speaking exclusively to The Huffington Post UK, Yannick Naud said Hollande's financial plans would leave a "much larger deficit", causing the markets to lose confidence and "economic chaos". Naud is a European economy specialist at Glendevon King Asset Management and is also running as Parliamentary candidate for Northern Europe for the MoDem party.

Under a quirk of French politics, an MP is sent to the French Parliament representing French people living in the UK and other countries in northwestern Europe. French people living in London account for around half of the constituency.

Socialist candidate Francois Hollande is running an exceptionally close campaign to replace Nicolas Sarkozy. Hollande was the front-runner in the polls for several months, although Sarkozy has closed the gap in recent days.

Naud told us: "The markets have to think that there is a clear plan to implement reform in order to reduce the deficit. If the market has any doubt that there is no plan to reduce the deficit, then you get a problem.

"That is exactly the problem you got in Italy, the Prime Minister at the time promised few things and never implemented them. The markets couldn't be sure."

Italy's economic crisis last year saw riots in the streets, the forced resignation of Prime Minister Silvio Berlusconi and an emergency government being formed by Mario Monti.

Hollande's pledge to implement a 75% top rate of tax for high earners would only accelerate the decline, according to Naud.

"Francois Hollande pretends that he will balance his budget by 2017, in fact if you look at the exact small-print, he is expecting growth after 2013 to be 2.5%/2.7%, which has never been achieved in France for many years," he adds.

"The only difference between France and Italy is that public debt is at 85.6% of GDP rather than 118%, but it's growing. Some expect it to reach 100% in a few years. By most measures, it's not getting better".

Under such a scenario, Naud predicts a "huge impact" on the UK economy. "In terms of foreign investment, French companies invest most in the UK. So in the short term, there would be money that wouldn't be reinvested in the UK.

"If France were to get into the same situation as Italy, that would mean most of the countries within the EU would fall into recession. In terms of percentage impact, it's very hard to predict.

"If you have a big shock in France, like we saw in Italy, they could change government quickly. If you've just elected someone, it could be very difficult to remove him quickly. The consequence of the instability would cause recession."

Naud also warned that a financial transaction tax, as proposed by President Sarkozy, would be "economic suicide". He dismissed Sarkozy's interest in the idea as "political posturing".

"If you do it unilaterally, you'll end up like Sweden did, with disappointing tax revenues as trade and business moves elsewhere," Naud added.